1/ May be you remember, that one of the things that happened on the crypto Black Thursday in March was that a lot of @MakerDAO CDP holders lost their collateral, because of crazy pressure on the liquidation system, which caused all their collateral to be seized

(thread)

2/ The affected loans didn't expect that, as the general perception was that even if your loan is liquidated, you still get back most of your collateral after the loan is repaid. This event also left a hole in the @MakerDAO protocol balance sheet, threatening to collapse DAI

3/ The protocol was quick in auctioning new $MKR to fill the hole in the balance sheet, so the system became solvent again, but the users with the excessively liquidated loans were left with nothing

4/ After months of discussions if the vault holders should be compensated, a compensation plan was created and put up for on-chain voting... and it was rejected by the $MKR holders: https://vote.makerdao.com/polling-proposal/qmzcg1cq8c27vtd3ydfzer8hzon7mdwuu2enfzugxwqpbm

5/ Now there is an alternative plan being discussed, which ppl that lost money are hoping to be accepted: https://forum.makerdao.com/t/vault-compensation-plan-v2/3584

6/ IMHO, there is a high chance no compensation plan will be accepted and I think this is the hard truth of blockchain protocols. If the things go foobar, there is usually nobody to go to and complain. This is very different from the existing financial system.

7/ When we argue that the current financial system is inferior and everything should be replaced with blockchain, we should keep situations like this in mind:

8/ In the 0-trust, permission-less and smart-contract driven world of Ethereum, there are no compensations and bailouts. If something bad happens there is a high chance you will lose all your funds. This is the cold truth and everyone entering this space should keep it in mind